Key Take Aways from Northern New Jersey’s October 2023 Meeting
• Developer clients are still bringing projects to seek approval and infrastructure is strong. (Tony Ianuale – Dresdner Robin)
• Infrastructure work is strong with requests for proposals every week from major firms. (John Tregidgo – Dresdner Robin)
• There has been an uptick in school development authority projects. (John Tregidgo – Dresdner Robin)
• There have been a few residential mixed-use projects in Jersey City getting proposal requests. (John Tregidgo – Dresdner Robin)
• It has been quiet in regards to regulatory issues. (John Tregidgo – Dresdner Robin)
• Highest rate on the 5-year and the 10-year in quite some time, which has had a stifling effect. (Gregory James – NAI James E. Hanson Inc)
• Prime construction loan is at 8.5% and requires a larger percentage going into the project. (Gregory James – NAI James E. Hanson Inc)
• There is a NJ governor election coming up and it’s making it difficult to anticipate regulatory changes for projects due in or after that in regards to affordable housing. (Gregory James – NAI James E. Hanson Inc)
• Lots of towns have exposure in the affordable housing area. (Gregory James – NAI James E. Hanson Inc)
• It’s likely there may be more rate hikes from the Fed. (Gregory James – NAI James E. Hanson Inc)
• It’s conceivable that borrowers will have to find an equity partner if they can’t get an extension. (Gregory James – NAI James E. Hanson Inc)
• If you don’t have to sell, there’s not much incentive to sell now, which is leading to a supply shortage. (Gregory James – NAI James E. Hanson Inc)
• The multi-family units that are being built are an A or B product with more amenities. (Gregory James – NAI James E. Hanson Inc)
• Rates are making projects very difficult. Because of subsidies and credits, they’re still able to produce units. (Mike Monxhwedey – Foya Development Group)
• Construction costs are improving. (Mike Monxhwedey – Foya Development Group)
• Student and workforce housing is big. (Mike Monxhwedey – Foya Development Group, Leslie Cook – IMC Construction)
• There was a summer slowdown, but the light switch went back on after Labor Day. There is more traffic suggesting people are going back to work. (Bill Hanson – NAI James E. Hanson Inc)
• There is a big question about how the suburban office market will transition over the next 4 years. (Gregory James – NAI James E. Hanson Inc)
• The retail market has come back in general, though there have been some smaller big box chains going out of business. (Gregory James – NAI James E. Hanson Inc)
• Costar has partnered with Preqin and they have data on funds and properties within funds. (Nancy Baccarella-Garcia – Costar)
• Costar customers include brokers, corporate real estate, developers, owners, investors, etc. (Nancy Baccarella-Garcia – Costar)
• E&O premium is increasing for a variety of reasons. (Paul Hacker – Axis Insurance Systems)
• Cyber insurance is going down because companies are better securing their systems and offering better training to employees. (Paul Hacker – Axis Insurance Systems)
• Hackers can now introduce malware into your system without you clicking on an email. (Paul Hacker – Axis Insurance Systems)
• If you’re traveling, don’t use the USB plugs or cables in public spaces. Use your own cable that plugs into the wall. Hackers can steal your data through public cables and plugins, which is called Juice Jacking. (Paul Hacker – Axis Insurance Systems)
• The DEP was aggressive with limiting use of the land in The Highlands and it hasn’t been revisited in years. (Greg Gloor – Dresdner Robin)
• There are not a lot of young people coming into the profession of land surveying. (Greg Gloor – Dresdner Robin)
• PSENG is investing in fortifying infrastructure and more substations to support more development. (Greg Gloor – Dresdner Robin)
• Proptech or property technology is all the tech tools real estate experts used to optimize the way people buy/sell/research real estate. (Leslie Cook – IMC Construction)
• Technology is used to track trends, forecasting, etc. Can track phone data to know the demographics of who is going into what types of properties. (Leslie Cook – IMC Construction)
• During the pandemic, technology allowed potential buyers or renters to see apartments without going on. You can also sell or rent before the property is actually built. (Leslie Cook – IMC Construction)
• Contech is a phrase used to identify advanced construction technology. (Leslie Cook – IMC Construction)
• Virtual reality is used in construction. VR glasses show what it will look like when it’s completed before the work is done, which allows you to fix problems before they’re created. (Leslie Cook – IMC Construction)
• Technology helps people not in that space understand what a space could be. (Leslie Cook – IMC Construction)
• BIM (Building Information Modeling) is the most common technology being used. Allows architects, engineers, contractors to collaborate. (Leslie Cook – IMC Construction)
• Modeling helps with quality control, safety, time, budget, etc. and allows them to pre-negotiate more deals. (Leslie Cook – IMC Construction)
• They use drones on all of their projects. The drones will fly over the site and can show various options. (Leslie Cook – IMC Construction)
• They have the ability to filter in a wide variety of data to provide clients the best options for solutions. (Leslie Cook – IMC Construction)
• They try to get involved in the project very early in the process. (Leslie Cook – IMC Construction)
• The Citadel Group is a group of national GCs who all work together. (Leslie Cook – IMC Construction)
• They use QR codes in spaces to connect users with information. (Leslie Cook – IMC Construction)
• Senior projects have shifted from Pennsylvania to New Jersey. (Leslie Cook – IMC Construction)
• It’s a challenging time in the multi-family sector with the amount of supply coming online. (Mateusz Wnek – CoStar Group)
• Lots of approvals for multi-family happened when interest rates were low. (Mateusz Wnek – CoStar Group)
• They are expecting a little bit of an increase in the vacancies in multi-family. (Mateusz Wnek – CoStar Group)
• Rent growth is still pretty healthy at 3.5% – down from peak but still ahead of averages. (Mateusz Wnek – CoStar Group)
• The largest urban submarkets remain the most affordable with rents under $1900/ month. (Mateusz Wnek – CoStar Group)
• Morris County is seeing higher rent growth and lower vacancies than nearby counties. (Mateusz Wnek – CoStar Group)
• 78% of new stock since 2020 has been upscale luxury units. Lots of luxury housing is being built in areas where the median income is lower. Developers may have been expecting ongoing wage growth and/or population growth, but that hasn’t happened. (Mateusz Wnek – CoStar Group)
• There is a mismatch of what is being built vs the type of housing that is needed. (Gregory James – NAI James E. Hanson Inc)
• Oxford Economics is still forecasting a mild recession will start in Q4. There is a somewhat greater chance of a soft landing and avoiding a hard recession. Subtly more optimistic. (Mateusz Wnek – CoStar Group)
• They are expecting a marginal labor market decline. (Mateusz Wnek – CoStar Group)
• Treasury yields are at the highest level since August 2007. (Mateusz Wnek – CoStar Group)
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